The march of regulation in the
financial industry in recent times has been
well-documented. Firms in all the major financial centres have
had to pump vast sums into their compliance departments to cope
with the wave of new rules aiming to tame some of the perceived
excesses of the past.

But those western banks operating in the
Asia-Pacific region seem to have an unenviable task all the
same. Not only is there the need to deal with the
'extra-territoriality’ of regulations that creep
over from the US and Europe, but there is also the multitude of
local regulators to think about too.

The head of a large western bank that has operations
spanning across Asia-Pacific is obliged to listen carefully to
instructions flowing from other regions, while making sure not
to fall foul of any rules in local markets too.

Naturally, this involves employing a lot of staff to cope
with the volume of regulations flowing around the region.

Banking heads in the European Union undoubtedly have similar
problems, but the fact that Brussels encourages a certain
amount of joined-up thinking means their workload is less
pronounced.

For the Asia-Pacific head, thinking about markets as diverse
as Japan, Thailand, Australia and India presents a much more
varied and complex problem. And despite the heavy regulatory
burden investment banks in the US have had to deal with, one
bit of comfort they can take is that at least it has mostly
come from one original source – the
Dodd-Frank Act – and the agencies implementing the
rules tend to co-operate as far as possible.

There has been plenty of pushback around the world over what
is seen as the overreach of some of the US agencies and their
regulations, and that is understandable when banks already have
to deal with such a variety of regulation in the countries in
which they operate. And it is not just the banks. Some
countries also do not appreciate financial regulation that
comes from a foreign source having such a profound impact on
their financial sector.

These problems do not look set to alleviate anytime soon, so
Asia-Pacific bank heads are going to have deal with the issues
for the time being, attempting to encourage as much
co-ordination among regional regulators as possible, while at
the same time keeping those in their home jurisdictions happy.
The one thing that they can rely on, however, is that their
compliance departments are not going to shrink anytime
soon.

Further reading on Euromoney

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